onebornfree
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January 12th, 2018, 1:39 pm #41

z1235 wrote:
January 12th, 2018, 1:13 pm

“The application of machine learning science to financial prediction is still in its early stage,” he said. “We are just scratching the surface.” 
Oh dear, the naivete and blind optimism of the young and idealistic. Truly a marvel to behold! :-) [ Also good for a laugh!]

regards, onebornfree
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January 12th, 2018, 1:42 pm #42

z1235 wrote:sorry for the bad copy/paste but the article behind a WSJ paywall so a link wouldn't have worked
I read it. Probably should edit out the images, at least, since WSJ will be able to see all the image requests coming from tapatalk.

As a general response to the article, I'll point out the #1 mistake that I see people make when they start contemplating the idea of using a computer to "predict the market". This mistake is the idea of applying regression to price charts. It looks promising because we can use regression to "curve-fit" plots of apparently random-looking data-plots and the curves that we generate sometimes give surprising insight into the structure of the data.

But price-charts are not really data-plots, at least, not in the same sense as telemetry data. A plot of data from a telemetry system can be imagined as having some "unknown variables" for which we are "solving" by using regression to derive a best-fit curve - a closed-form equation that "fits" the data. What are the "unknown variables" of a price chart? Well, the unknown variables are inside the skulls of each market participant - buyer or seller - and we call the concrete manifestation of those unknown variables choice. So, if we're going to apply regression methods to price-charts, we're really taking on the entire problem of brain-modeling, trying to infer brain-states across a distributed population from a chart of numbers. This might even be feasible one day - it is definitely possible, in principle. But by the same token, you'll certainly never solve the problem by choosing an obviously wrong model, that is, by abstracting the choices of individuals as "random variables" having some "stable mean" which you are trying to infer by regressing price-charts.

There are several avenues where I see AI having a huge impact on trading and markets in the future:
  • XAI - Explainable AI. As noted in the article, this kind of AI stands in tension with AI that just solves the problem at hand, but this tension arises from resource-limitations not from an inherent antagonism between intelligence and explanation. You can have both but, for a given amount of resources, you have to trade one off for the other.
  • AI agents embedded in a competitive market so that the market itself is guiding the search for AIs that work for people's uses. This is why I think ETH has so much potential.
  • AI-assisted replication of human competency. ACME Trading Corp is headed by a brilliant investor John Smith with a preternatural knack for stock-picking. Nobody can just write an AI from scratch that captures the essence of the secret sauce in Smith's brain. But that doesn't mean that his secret sauce couldn't be replicated to other human individuals if they could just get the key question answered that will allow them to learn the difference between their intuition and John Smith's intuition at key points. So, we can build AI systems that will allow a single expert's intuition to be amplified out to hundreds or thousands of other individuals by compressing the amount of questions they have to ask to replicate the decision he would make at a given point. Note that this abstracts away all the problems of "understanding markets" because the individual humans are doing that part. It's really about creating an ultra-efficient communication and behavior amplification network. This thought was inspired by a corporation where the owner has these rigid rules that his employees have to follow that have to do with mimicking his way of thinking (this is part of the job and you walk in knowing that) but I totally can't remember the name of the company or the owner.
There are many more avenues of approach but these should give you the idea. Straight up chart regression is the brute-force approach and guaranteed to require the most effort for the least return. The solution is that we will have to think smarter, not harder.
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January 12th, 2018, 2:01 pm #43

Clayton wrote:
I read it. Probably should edit out the images, at least, since WSJ will be able to see all the image requests coming from tapatalk.
I removed the images. I'll delete it all if you prefer. Also feel free to delete a big enough chunk of it if you want. 
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January 12th, 2018, 2:14 pm #44

onebornfree wrote:
January 12th, 2018, 1:39 pm

Oh dear, the naivete and blind optimism of the young and idealistic. Truly a marvel to behold! :-) [ Also good for a laugh!]

regards, onebornfree
What I find most interesting about this whole "sanctity of algorithms" debate here is that I'm being [fanatically?] opposed here by two individuals who have elsewhere claimed to be more than a little familiar with the underlying principles of Austrian economic theory, and that schools application of human action theory [aka "methodological individualism"] to this very subject - that is: the predicting of market movements and the future state of the economy .

To whit: [Once more, with feeling ! :-) ] :

Myth #5 : Economists, using charts or high speed computer models, can accurately forecast the future.

"The problem of forecasting interest rates illustrates the pitfalls of forecasting in general. People are contrary cusses whose behavior, thank goodness, cannot be forecast precisely in advance. Their values, ideas, expectations, and knowledge change all the time, and change in an unpredictable manner. What economist, for example, could have forecast (or did forecast) the Cabbage Patch Kid craze of the Christmas season of 1983? Every economic quantity, every price, purchase, or income figure is the embodiment of thousands, even millions, of unpredictable choices by individuals.

Many studies, formal and informal, have been made of the record of forecasting by economists, and it has been consistently abysmal. Forecasters often complain that they can do well enough as long as current trends continue; what they have difficulty in doing is catching changes in trend. But of course there is no trick in extrapolating current trends into the near future. You don't need sophisticated computer models for that; you can do it better and far more cheaply by using a ruler. The real trick is precisely to forecast when and how trends will change, and forecasters have been notoriously bad at that. No economist forecast the depth of the 1981–82 depression, and none predicted the strength of the 1983 boom.

The next time you are swayed by the jargon or seeming expertise of the economic forecaster, ask yourself this question: If he can really predict the future so well, why is he wasting his time putting out newsletters or doing consulting when he himself could be making trillions of dollars in the stock and commodity markets?"

From: [Murray Rothbard's} "Ten Great Economic Myths" https://mises.org/wire/ten-great-economic-myths

Regards, onebornfree
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January 12th, 2018, 2:15 pm #45

z1235 wrote:
Clayton wrote:
I read it. Probably should edit out the images, at least, since WSJ will be able to see all the image requests coming from tapatalk.
I removed the images. I'll delete it all if you prefer. Also feel free to delete a big enough chunk of it if you want. 
I'll pare it down to fair-use size later.
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January 12th, 2018, 4:07 pm #46

onebornfree wrote: What I find  most interesting about this whole "sanctity of algorithms"  debate here is that  I'm being [fanatically?] opposed  here by two individuals who have elsewhere claimed to be more than a little familiar with the underlying principles of Austrian economic theory, and that schools application of human action theory [aka "methodological individualism"] to this very  subject - that is: the  predicting of  market movements and the future state of the economy .
Neither AE nor methodological individualism preclude making profits from successful bets about the future (including future prices). As a matter of fact, this is what every entrepreneur and businessman does all the time. Are you suggesting that they too should become enlightened like you, and stop making any assumptions about the future that are based on present/past data? (Btw, is there any other type of data out there?)  

According to you, what's the point of even getting out of bed in the morning when you can't be certain that you won't get hit by a bus? 
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January 12th, 2018, 5:17 pm #47

z1235 wrote:
January 12th, 2018, 4:07 pm

Neither AE nor methodological individualism preclude making profits from successful bets about the future (including future prices). As a matter of fact, this is what every entrepreneur and businessman does all the time. Are you suggesting that they too should become enlightened like you, and stop making any assumptions about the future that are based on present/past data? (Btw, is there any other type of data out there?)  

According to you, what's the point of even getting out of bed in the morning when you can't be certain that you won't get hit by a bus? 
"Neither AE nor methodological individualism preclude making profits from successful bets about the future (including future prices). "

Of course. However, these are always bets on possibilities, not outright certainties.

"As a matter of fact, this is what every entrepreneur and businessman does all the time. " .

Sadly, the vast majority of these projects sooner or later end in failure. We only get to hear about the rare successes,and then presume to know "for sure" that the persons involved were prescient regarding future market conditions for their product or service.

"According to you, what's the point of even getting out of bed in the morning when you can't be certain that you won't get hit by a bus? "

My first rule: never get out of bed if you can avoid so doing [ especially if there are buses around] :-) .

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January 12th, 2018, 5:28 pm #48

onebornfree wrote: "Neither AE nor methodological individualism preclude making profits from successful bets about the future (including future prices). "

Of course. but these are always bets on possibilities, not outright certainties.
Yes! Without making bets on possibilities you can't ACT. No human can. No one knows anything with outright certainty. No one needs to in order to navigate (act in) reality, either.
"As a matter of fact, this is what every entrepreneur and businessman does all the time. " .

Sadly, the vast majority of these projects sooner or later end in failure. We only get to hear about the rare successes,and then presume to know "for sure" that the persons involved were prescient regarding future market conditions for their product or service.
I meant literally EVERY businessman and entrepreneur. Every CEO/owner of every company does this every day. He makes assumptions about the future prices of goods and services he plans to buy and the goods and services he plans to sell. Every single minute of every day. Are you saying that the vast majority of businesses sooner or later end in failure?
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January 12th, 2018, 6:18 pm #49

onebornfree wrote: So psychologists differentiate between the two ways of decision making for humans for no good reason, correct?  There are no distinctions- for humans, heuristic decision making is automatically incorporated into all "algorithmic" thought processes, as you see it, right?  

And,  algorithmic thinking for you also includes the  "it feels like a good idea" notion, right?

regards onebornfree
No one can say for sure how humans make decisions. But virtually all human decisions are made on the basis of very simple, transparent reasons. Bob is eating a hamburger. Why is Bob eating a hamburger? Because he's hungry. Even a three-year-old can figure that out. Almost all decisions made by human beings - even entrepreneurial decisions - are more like the decision whether or not to eat than like the decision to make a particular move in chess. This is a diminutive view of humanity but it is also objectively the case.

For subtle decisions - decisions that we would describe as being due to "wisdom", "insight", "careful deliberation", etc. - we have to ask what makes them so different from basic decisions made on the basis of bodily needs or instinct? And it doesn't really matter what answer you give - as soon as you give an answer, I can use that answer as the specification for a software program that will exactly replicate the patterns underlying those subtler decisions. We do not know for sure that this can be done for all human decisions, but we already know it can be done for almost all human decisions (see the last paragraph) and that mechanizing the decision-making processes for subtler decisions is just a matter of enumeration. Take a gander at ConceptNet to get a feel for the idea of encoding human common-knowledge into database form for the purpose of enabling computer algorithms to model typical human reasoning processes.
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January 12th, 2018, 6:24 pm #50

z1235 wrote:
January 12th, 2018, 5:28 pm
Are you saying that the vast majority of businesses sooner or later end in failure?
Well, let's look at the last 10 years in the US, for example. Are you going to claim that most new businesses started during this period must have succeeded, despite the over-arching economic conditions [ i.e. severe recession], and the over-arching political environment [ i.e. higher taxes, increased regulation etc.] ?

As far as I can see, most new business started during this period will have failed miserably [along with already established ones], most often before they ever even really had a chance to get going/off the ground. There is no way to know for sure of course. I suppose one could check official [or other] nationwide declared bankruptcy rates 2007-2017 for example, to get a rough idea maybe.

And to presume the opposite: that most businesses started succeed [ even if the prevailing economic and political conditions are not factors], presumes that most entrepreneurs are either [1]prescient, [2]extremely flexible and successful in continually adapting to ever-changing market conditions, [3]or just plain lucky. This all seems very unlikely to me.[ Just call me "wet blanket" or similar :-) ]

Regards, onebornfree
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January 12th, 2018, 6:27 pm #51

This was a duplicate post- tried to delete but system wouldn't let me :-(

Regards, onebornfree
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January 12th, 2018, 6:28 pm #52

onebornfree wrote: I'm being [fanatically?] opposed  here by two individuals ...
Uh, if you go back through my posts, you will see that I haven't even actually disagreed with you about markets. I've mainly just been chatting about my own thoughts on what we can (and can't) use modeling to do. Remember, I'm not really an investor, so the investment side of things is of less interest to me... I'm more interested in the human mind itself. Specifically, I'm interested in how we can use our understanding of the human mind to replicate its abilities, most importantly, its ability to weigh options and choose the best available option.

Probably don't need to keep re-pasting text in the thread, this forum isn't like other forums where we're having some kind of meme-competition. It's a slow forum and keeping the thread free of a lot of clutter just makes it a nicer experience for everyone.
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January 12th, 2018, 7:03 pm #53

Clayton wrote:
January 12th, 2018, 6:28 pm
Remember, I'm not really an investor, so the investment side of things is of less interest to me...
Well, that may well be, but I should point out the title of this thread is "Investment and Speculation Philosophy" :-).

Also, I suppose that [" I'm not really an investor"] depends on one's definition of the word "investor" . If you have money saved "for a rainy day", and continue to so do, whether you keep it all in a bank, or under your mattress, [or wherever], then you are an "investor" of sorts, as far as I can see [ although you might not realize it]. Same is true if you have "invested" in a gun, ammo, food supplies and a hidey-hole in the woods , or gold coins, or in some new technology, seems to me. In all cases , you'd be merely trying to protect yourself against an unknown future by "investing" [saving] in certain things, yes? No? But maybe you have done none of these things, and nothing comparable, I don't know- its none of my biz really.

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January 12th, 2018, 8:48 pm #54

onebornfree wrote:Well, that may well be, but  I should point out the title of this thread is "Investment and Speculation Philosophy" :-).
My academic interest touches on investment. The point, here, is that it is possible to separate one's portfolio decisions from one's general theory of investment. The investment strategy that is appropriate for me is not the investment strategy that would be appropriate for, say, a global hedge fund manager. Nevertheless, I can still reason about what sorts of investment strategies are appropriate for a global hedge fund manager, even though I am not one.
Also,  I suppose that [" I'm not really an investor"] depends on one's definition of the word "investor" .  If you  have money saved "for a rainy day", and continue to so do, whether you keep it all in a bank, or under your mattress, [or wherever], then you are an "investor" of sorts, as far as I can see [ although you  might not realize it]. Same is true if you have "invested" in a gun, ammo, food supplies and a hidey-hole in the woods , or gold coins,  or in some new technology, seems to me.  In all cases , you'd be merely trying to protect yourself against an unknown future by "investing" [saving] in certain things, yes? No? But maybe you have done none of these things, and nothing comparable, I don't know- its none of my biz really.
As Mises said:
Praxeology consequently does not distinguish between "active" or energetic and "passive" or indolent man. The vigorous man industriously striving for the improvement of his condition acts neither more nor less than the lethargic man who sluggishly takes things as they come. For to do nothing and to be idle are also action, they too determine the course of events. Wherever the conditions for human interference are present, man acts no matter whether he interferes or refrains from interfering. He who endures what he could change acts no less than he who interferes in order to attain another result. A man who abstains from influencing the operation of physiological and instinctive factors which he could influence also acts. Action is not only doing but no less omitting to do what possibly could be done.
From that perspective, everyone is an "investor/entrepreneur" at all times, whether they think of themselves that way or not. But, yes, "I'm not an investor" is another way of saying that my personal investment decisions are my business.
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January 13th, 2018, 7:50 am #55

Clayton wrote:
January 12th, 2018, 8:48 pm
The point, here, is that it is possible to separate one's portfolio decisions from one's general theory of investment. The investment strategy that is appropriate for me is not the investment strategy that would be appropriate for, say, a global hedge fund manager.
This is a mistake, if I read you correctly The realities of the fundamental laws of economics and human action apply no less to hedge fund managers than they do to the individual [ including myself]. And so, unless they are extremely lucky, "the chickens will eventually come home to roost" for these managers and their naive, algorithm-addled clients, no differently than they will for the none-hedge-fund-allocated individual who nevertheless somehow ignores [ or is just not aware of] these same laws of economic reality.

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January 13th, 2018, 10:33 am #56

onebornfree wrote:
z1235 wrote: Are you saying that the vast majority of businesses sooner or later end in failure?
Well, let's look at the last 10 years in the US, for example. Are you going to claim that most new  businesses started during this period must have succeeded, despite the over-arching economic conditions [ i.e. severe recession], and  the over-arching political environment [ i.e. higher taxes, increased regulation etc.] ?  

As far as I can see, most new business started during this period will have failed miserably [along with already established ones], most often before they ever even really had a chance to get  going/off the ground. There is no way to know for sure of course. I suppose one could check official [or other] nationwide declared bankruptcy rates 2007-2017 for example, to get a rough idea maybe.

And to presume the opposite:   that most businesses started succeed [ even if the prevailing economic and political conditions are not factors], presumes that most entrepreneurs are either [1]prescient, [2]extremely flexible and successful in continually adapting to ever-changing market conditions,  [3]or just plain  lucky.  This all seems very unlikely to me.[ Just call me "wet blanket" or similar :-) ]

Regards, onebornfree
Wow, so you did actually go that far. So starting or running a business (which, by definition, involves making assumptions about future prices of goods and services) is a futile pursuit by naive, greedy, and bushy-tailed entrepreneurs that should have instead just invested their capital in the Permanent Portfolio and gone fishin'? Was that the message that you got from reading Mises and Rothbard? Would Mises be able to develop his Regression Theory of Money if he premised that past prices of things have absolutely no influence on their prices in the future? :)

Let's push this baby one step further... Are you saying that it's naive of ANYONE to factor in present/past data into his assumptions about tomorrow's or next year's prices? Accepting (and agreeing with you) that nothing about the future can be known for certain, is it equally likely that Starbucks coffee will be $5 vs. $500k tomorrow? When you wake up tomorrow, the whole world is just a clean slate completely unrelated with the day before, right? More generally, and to go back to my previous question, accepting that nothing about the future can be known for certain, is it equally likely that you will get hit by a bus if you get out of bed tomorrow vs that you won't? Is it equally likely that your dog of 10 years will kill you and eat you in your sleep vs that it won't? How do you even operate in this reality without factoring ANY past data into making assumptions about the future? 

There are moments (like this one) when I give a non-trivial probability that you are a (badly programmed) AI. You're a whisker away from failing the Turing Test. :)
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January 13th, 2018, 11:27 am #57

onebornfree wrote: This is a mistake, if I read you correctly The realities of the fundamental laws of economics  and human action apply no less to  hedge fund managers than they do to the individual [ including myself]. And so, unless they are extremely lucky, "the chickens will eventually come home to roost"  for these managers and their naive, algorithm-addled clients, no differently than they will for the none-hedge-fund-allocated individual  who nevertheless somehow ignores [ or is just not aware of] these same laws of economic reality.

Regards, onebornfree
Well, you and I simply disagree. The laws of economics are what they are, irrespective of your capitalization. But the set of available options (actions) is vastly different depending on your capitalization. I can't afford to hire people to track changes in the tax laws, to track and digest all the latest information on market movements, etc. If I were a global hedge fund manager, I would be (rightly) fired for not paying people to do these things. If I pay Rosie the intern $80k per year and she finds one update to the tax code that can save 0.01% at the end of the year for a $10bn hedge fund (that's $1M), the decision to employ her has netted $920k to the fund's bottom line. Is it fair that I have to employ Rosie just in order to escape the arbitrary rules of the State? Of course not. There's nothing just or fair about it, but it's also the name of the game. You either play by those rules or you don't play at all.

Then there's political risk. How do you store $1bn in cash? I mean, paper bills or even gold. Physical money. Are you going to build your own vault? How much will that cost? How will you staff the security cameras and the armed guards? Who will pay for all that? Are you going to store it all in a bank? What happens if a government (*ahem* US government) decides you owe unpaid taxes on it and seizes it? So, now you need to start thinking about cross-jurisdictional custody of your funds as a political insurance measure.

Even the natural rules (those having nothing to do with risks created by the State) of large-cap investment are different from those of small-cap investment. If you're nurturing your own $100k portfolio, you probably don't need to think about things like insurance. But when you start managing truly large amounts of capital, you need to start thinking about risk-pooling. Risk pooling originated in the days of shipping when shipping concerns would pool their earnings across shipments in order to reduce the risk of total ruin. Suppose companies A, B and C form a risk pool. If Company A's ship goes down, all three companies take a loss, but no one company goes out of business. Since all three companies have the same protection, it is worth it to stay in the pool.

Anyway, as I said above, I'm not deeply interested in the topic of investment for its own sake. My interests have more to do with the nature of the human mind and how we make decisions (including investing decisions).
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January 14th, 2018, 7:08 am #58

z1235 wrote:
January 13th, 2018, 10:33 am
onebornfree wrote:
z1235 wrote:
Wow, so you did actually go that far. So starting or running a business (which, by definition, involves making assumptions about future prices of goods and services) is a futile pursuit by naive, greedy, and bushy-tailed entrepreneurs that should have instead just invested their capital in the Permanent Portfolio and gone fishin'? Was that the message that you got from reading Mises and Rothbard? Would Mises be able to develop his Regression Theory of Money if he premised that past prices of things have absolutely no influence on their prices in the future? :)

Let's push this baby one step further... Are you saying that it's naive of ANYONE to factor in present/past data into his assumptions about tomorrow's or next year's prices? Accepting (and agreeing with you) that nothing about the future can be known for certain, is it equally likely that Starbucks coffee will be $5 vs. $500k tomorrow? When you wake up tomorrow, the whole world is just a clean slate completely unrelated with the day before, right? More generally, and to go back to my previous question, accepting that nothing about the future can be known for certain, is it equally likely that you will get hit by a bus if you get out of bed tomorrow vs that you won't? Is it equally likely that your dog of 10 years will kill you and eat you in your sleep vs that it won't? How do you even operate in this reality without factoring ANY past data into making assumptions about the future? 

There are moments (like this one) when I give a non-trivial probability that you are a (badly programmed) AI. You're a whisker away from failing the Turing Test. :)
Are you self-employed? If so, for how long has that been the case?

Regards, onebornfree
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January 14th, 2018, 7:44 am #59

Clayton wrote:
January 13th, 2018, 11:27 am
Well, you and I simply disagree. The laws of economics are what they are, irrespective of your capitalization. But the set of available options (actions) is vastly different depending on your capitalization. I can't afford to hire people to track changes in the tax laws, to track and digest all the latest information on market movements, etc. If I were a global hedge fund manager, I would be (rightly) fired for not paying people to do these things. If I pay Rosie the intern $80k per year and she finds one update to the tax code that can save 0.01% at the end of the year for a $10bn hedge fund (that's $1M), the decision to employ her has netted $920k to the fund's bottom line. Is it fair that I have to employ Rosie just in order to escape the arbitrary rules of the State? Of course not. There's nothing just or fair about it, but it's also the name of the game. You either play by those rules or you don't play at all.

Then there's political risk. How do you store $1bn in cash? I mean, paper bills or even gold. Physical money. Are you going to build your own vault? How much will that cost? How will you staff the security cameras and the armed guards? Who will pay for all that? Are you going to store it all in a bank? What happens if a government (*ahem* US government) decides you owe unpaid taxes on it and seizes it? So, now you need to start thinking about cross-jurisdictional custody of your funds as a political insurance measure.

Even the natural rules (those having nothing to do with risks created by the State) of large-cap investment are different from those of small-cap investment. If you're nurturing your own $100k portfolio, you probably don't need to think about things like insurance. But when you start managing truly large amounts of capital, you need to start thinking about risk-pooling. Risk pooling originated in the days of shipping when shipping concerns would pool their earnings across shipments in order to reduce the risk of total ruin. Suppose companies A, B and C form a risk pool. If Company A's ship goes down, all three companies take a loss, but no one company goes out of business. Since all three companies have the same protection, it is worth it to stay in the pool.

Anyway, as I said above, I'm not deeply interested in the topic of investment for its own sake. My interests have more to do with the nature of the human mind and how we make decisions (including investing decisions).
"The laws of economics are what they are, irrespective of your capitalization. But the set of available options (actions) is vastly different depending on your capitalization. I can't afford to hire people to track changes in the tax laws, to track and digest all the latest information on market movements, etc. If I were a global hedge fund manager, I would be (rightly) fired for not paying people to do these things. If I pay Rosie the intern $80k per year and she finds one update to the tax code that can save 0.01% at the end of the year for a $10bn hedge fund (that's $1M), the decision to employ her has netted $920k to the fund's bottom line. Is it fair that I have to employ Rosie just in order to escape the arbitrary rules of the State? Of course not. There's nothing just or fair about it, but it's also the name of the game. You either play by those rules or you don't play at all."

After agreeing that the 'laws of economics are what they are, irrespective of your capitalization", you then obfuscate with irrelevancies.

Yes, regardless of company size, tax liabilities and the ability to minimize those liabilities, a global hedge fund is just as susceptible to the macro laws of economics as is the individual. [ Although I'll grant that if a company knows for certain that it will always be bailed out by the government regardless of what happens, then that might fundamentally change its core policies etc.]

"Even the natural rules (those having nothing to do with risks created by the State) of large-cap investment are different from those of small-cap investment. If you're nurturing your own $100k portfolio, you probably don't need to think about things like insurance. "

Nothing could be further from the truth.

The individual should be just as concerned about insurance as large institutional company investors. However, the reality is that many are not, or think they are adequately insured, when they are not. [Or think that because they "invest" with a large hedge fund or similar, that they are magically "insured" against the vagaries of the markets :-) ]

For example, the individual [or institution] with a portfolio made up entirely of stocks [no matter how "diversified"], has no insurance against either unforeseen deflationary depression, or rampant inflation.

Similarly, the individual [or institution]with a portfolio 100% in cash [ or near cash equivalents such as long term bonds] has zero insurance against unforeseen rampant inflation [when cash loses value, and gold does extremely well], and will not do well if and when stock markets unexpectedly boom.

The individual [or institution] who is 100% in gold bullion has no insurance against unforeseen deflationary depression either [when "cash is king"]. And the same individual [or institution]will also not do well in times of general economic prosperity, when the stocks and stock markets take off.

The business owner who has everything he/she owns "invested" in the success of their business has no insurance against either unforeseen severe recession, deflationary depression, or rampant inflation.

So, I would suggest that insurance for the individual against the various 'big picture" economic environments [ inflation, deflation, economic prosperity] is just as much of a concern[ or should be]for the individual as for any large company with its [admittedly] more complex tax problems etc., as far as I can see.

"My interests have more to do with the nature of the human mind and how we make... investing decisions)."

In other words, the very subject of this thread :-) .

And so it goes...........

regards, onebornfree
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z1235
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z1235
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Joined: December 16th, 2012, 3:47 pm

January 14th, 2018, 12:38 pm #60

onebornfree wrote:
Are you self-employed? If so, for how long has that been the case?
Irrelevant.
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